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Back-Door Roth IRA Contributions Endorsed by Congress

(January 12, 2018) A back-door Roth IRA contribution whereby an individual who is not eligible for a Roth IRA contribution contributes to a Traditional, and then immediately converts the Traditional IRA to a Roth IRA has, in the past, arguably been considered a tax loophole. Congress, however, recently set the record straight in the Tax Cuts and Jobs Act of 2017 conference committee report. In the report, the Congressional writer footnotes (four separate times) Congress's approval for such a transaction. With that said, taxpayers who are contemplating a back-door Roth IRA contribution should seek tax advice prior to such a transaction to determine the tax consequences, if any, that will result from carrying out the transaction.

Click here to access the full conference committee report and to view footnotes 268, 269, 276 and 277.